Fri, Aug 04, 2006 - Page 11 News List

UMC expands stake in ProMOS

STAFF WRITER , WITH BLOOMBERG

United Microelectronics Corp (UMC, 聯電), the world's second-largest maker of made-to-order chips, bought ProMOS Technolo-gies Inc (茂德) shares for the third time in two weeks, raising its holding to 3.9 percent.

UMC yesterday bought 84.7 million shares of ProMOS at an average price of NT$12.97, spending NT$1.1 billion (US$33.5 million), the chipmaker said in a filing to the Taiwan Stock Exchange.

The purchase represents a 1.7 percent stake in ProMOS, the nation's third-largest maker of computer memory chips, according to data compiled by Bloomberg.

UMC last week bought a 1.3 percent stake in ProMOS and earlier this week purchased 0.9 percent of the smaller memory chipmaker's shares.

The purchases are a "financial arrangement," UMC said in the three filings to the stock exchange, without elaborating.

Not a merger

ProMOS doesn't intend to merge or cooperate with UMC, the Chinese-language Commercial Times reported yesterday, citing an unidentified official at ProMOS.

Separately, ProMOS yesterday reported NT$11.663 billion in second-quarter sales, with net income reaching NT$1.086 billion, or NT$0.21 earnings per share.

For the first half of the year, the company's revenues amounted to NT$19.577 billion, with net income of NT$568 million, or NT$0.11 per share.

ProMOS' second-quarter sales grew 47 percent from the first quarter, mainly due to stable market demand and DRAM prices, according to the company.

Moreover, its gross margin rose to 25 percent in the three months ending June 30 from 8.1 percent in the previous quarter, the company added.

At an investors' conference yesterday, ProMOS chairman Chen Min-liang (陳民良) said that the company would team up with Hermes-Epitek Corp (漢民科技) to establish a blu-ray LED company with him assuming the chairmanship of the NT$550 million venture.

Chen said ProMOS would contribute NT$160 million in the new venture at the Southern Taiwan Science Park (南部科學園區), while Hermes-Epitek would invest NT$80 million. The rest would come from other partners which he didn't name.

The venture was expected to start mass production in the second quarter, Chen said.

Shares of ProMOS rose NT$0.30 to NT$13.00, following news of the UMC purchase, while UMC's shares advanced NT$0.45 to close at NT$18.05 after the company forecast higher operating margins.

Pickup

UMC chief executive Jackson Hu (胡國強) on Wednesday forecast operating margin would expand to 10 percent in the third quarter from 6 percent in the previous three months amid rising cellphone demand.

"We view this as a positive step forward and interpret this as a modest pickup in market share by UMC," UBS Securities Ltd Taiwan technology head William Dong wrote in a report on Wednesday after the announcement.

"While other foundries are expecting a flat to down quarter in Q3, UMC is expecting a rise in revenue," Dong said.

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